ACCC eyes online deal site Scoopon over misleading conduct

Scoopon and similar sites sell vouchers for discounted products by negotiating deals with businesses.

www.scoopon.com.au

The Australian Competition and Consumer Commission is taking court action against one of Australia's largest group buying websites for misleading and deceptive conduct.

The ACCC alleges Scoopon misled consumers about their ability to redeem vouchers, their refund rights and the price of goods advertised for some of its deals.

Scoopon says it will review the ACCC's allegations and work to resolve the issues raised by the regulator.

Scoopon and similar sites, generally referred to as "daily deals" or "deal of the day" sites, typically sell vouchers for heavily discounted goods or services by negotiating deals with businesses.

ACCC chairman Rod Sims alleges Scoopon told businesses they would not face any costs or risks in entering a deal with Scoopon, when they did have to pay a fee.

"The general concern with online group buying is consumers find it difficult to redeem the vouchers and then finding that if they don't redeem them, they find it very difficult to get refunds," Mr Sims said

"We're alleging in this particular case that Scoopon did represent to consumers that they would be able to redeem the vouchers and if they couldn't they'd get a refund when in fact there is a number of instances where this isn't a case."

He says the ACCC has received many complaints about the online group buying industry since it took off in Australia in 2010.

"In 2011-12 we had over 1700 complaints and in the most recent year we've had over 1000 complaints," Mr Sims said.

"This makes online group buying one of the most complained about sectors that we have, and so we take it very seriously."

ACCC case alleges Scoopon misled companies, consumers

The ACCC's case also alleges Scoopon misled companies as it negotiated deals by claiming that as much as 20 to 30 per cent of the vouchers they issued would not be redeemed by shoppers.

Mr Sims says there was no reasonable basis for this claim.

"One of the problems is that businesses are misled about how many vouchers will be redeemed, they prepare accordingly for potentially the wrong number of vouchers to be redeemed, and then of course consumers can't get them redeemed," he said.

"So there's sort of a double-whammy effect of the behaviour in both relation to the businesses and the consumers."

Mr Sims says the ACCC is making online competition and consumer issues a priority.

"Ensuring that the digital revolution delivers competition benefits to consumers and small businesses is a focus for the ACCC," he said.

In a statement, Scoopon told the ABC the company has worked continually to improve its services.

"We have come a long way from being a small business to being one of Australia's largest group buying sites, serving over two million customers," a spokeswoman said.

"We have also recognised the need to continuously improve our deal selection and customer service policies."

The company has signed the Association for Data-driven Marketing and Advertising (ADMA) code of practice.

The case will be heard in the Brisbane Federal Court later this month.